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1 Right Honorable Speaker, 1. I Feel Honored to Rise Before This August

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1 Right Honorable Speaker, 1. I Feel Honored to Rise Before This August Right Honorable Speaker, 1. I feel honored to rise before this august Legislature-Parliament to present the fourth budget after the elections of the Constituent Assembly which was formed after series of historical struggles, people's movement and the Madhes movement. This budget is also being presented on the eve of the completion of the adjustment and rehabilitation of Maoist army combatants and promulgation of the new constitution by the Constituent Assembly with the consent of the political parties within the early months of the next Fiscal Year. On this occasion, I would like to express my deepest and sincere tribute to the entire known and unknown martyrs who sacrificed their most valuable lives for the sake of democracy, republic and federalism. 2. Commitment has been made to submit, in front of people, a draft of the new Constitution through latest political consensus within the extended period of the Constituent Assembly. I am confident that the peace process is coming to a logical conclusion. The constitution drafted by the Nepalese people will be promulgated within few months from now. This will be the most important chapter in terms of political accomplishment. Once the constitution is promulgated, I am sure that qualitative changes will take place in political, economic, social and cultural aspects of the country. 3. Pre-budget discussion was held in the Legislature-Parliament for the first time after the formation of the Constituent Assembly. I have prepared this budget by paying serious attention and giving due considerations to the suggestions given by the Honorable Members of the Parliament in relation to the principles and priorities of the budget, and Policies and Programs of the Government. 4. The directives, principles and policies of the Interim Constitution, approach paper of the Three Year Plan, Policies and Programs of the Government for Fiscal Year 2011-12, national targets of the Millennium Development Goals, suggestions and feedback provided by various quarters including political parties, business communities and academia have formed the basis in the formulation of this budget. I have put special efforts to make the budget of coming Fiscal Year forward-looking, 1 people-oriented, balanced, inclusive and gender-responsive such that all Nepalese could feel ownership of it. 5. The present government, formed with the consent and support of all the forward looking political forces, is geared towards the campaign of creating a prosperous, modern, independent, just and inclusive New Nepal by abolishing feudalism of all forms with the cooperation of public, cooperative and private sector. This has been a policy stance of the government which was already mentioned in the White paper I made public on 12 April 2011. I have prepared this budget taking these policies and concepts as guidance. 6. On the one hand, production and productivity in the economy has been low, and on the other, even the limited production has not been fairly distributed. In order to address this fundamental problem of the economy, the budget has focused on creating employment opportunities in the economy by establishing a foundation for development that is based on social justice that is balanced and inclusive. In this regard, enhancing production and productivity in agricultural and industrial sectors, promoting investment of private sector in industry and infrastructure, reducing poverty and inequality by fairly distributing the available opportunities will be the major thrust of the budget. 7. I have explored coordinative and complimentary roles of public, cooperative and private sectors in order to transform natural, economic and human resources into an important means and engine by identifying, mobilizing and prioritizing existing resources of the country. It is impossible to meet the developmental expectation of the Nepali people by a single budget. However, I am confident that this budget will give a message to them that we have been heading towards that end. Honorable Speaker, 8. I have already submitted Economic Survey, 2011 which contains socio- economic indicators of the country with their trends and characteristics and an annual status review of the public enterprises before this august Legislature-Parliament. Now, I would like to briefly present some of the macroeconomic indicators of the last three years after the elections of the Constituent Assembly as well as the status of those indicators to date. 2 a. Economic growth rate for the current Fiscal Year is estimated to be 3.5 percent. Average economic growth rate over the last three years was below 4.0 percent. Inflation, which persisted at double digit during the last two years, has come to a single digit in this year. b. As of 15 June of the Fiscal Year, i.e. first 11 months, both imports and exports have increased approximately by 6.0 percent. Despite an increase in the merchandise export compared to previous year, trade deficit continued to increase during the last three years. Similarly, since last Fiscal Year, the Nepalese economy started recording a balance of payment deficit. Despite this, foreign exchange reserves remains sufficient to meet 7 months equivalent imports of goods and services. c. Revised total expenditure of the current Fiscal Year is estimated to be Rs. 306.27 billion. Current expenditure is estimated to be Rs. 180.14 billion, capital expenditure Rs. 108.08 billion, and principal repayment Rs. 18.04 billion. Even though the size of the total budget has been increasing continuously, availability of budget for capital expenditure is squeezing because of the rapid rise in current expenditure. At the same time, absorptive capacity of foreign aid has also been gradually eroding. d. Revenue mobilization, hence collection, in this Fiscal Year was adversely affected due to delayed submission of the current Fiscal Year budget, non expansion of economic activities and decreased imports. Revenue collection is estimated to be Rs. 206 billion- an increase by 14.4 percent over the actual collection of the last Fiscal Year. e. The next Fiscal Year budget needs to be focused towards achieving a higher growth rate by improving macroeconomic indicators, expanding capital market and enhancing confidence, promoting private sector investment by expanding physical and economic infrastructures, and focusing economic activities in the productive sectors. I am confident that this budget will be able to accelerate economic growth and ensure equitable development by increasing 3 investment in the public, private and cooperative sectors and by bringing in dynamism in the economy. 9. I have also submitted ministry-wise statement of targets and progress with expenditure appropriated to each ministries before this august Parliament today. Vision and Basic Principles of the Budget Honorable Speaker, 10. I have felt that the political mileage so far achieved by us has been challenged by issues such as sidelining of economic development agenda, lack of common economic program, prevalence of transitional political situation , lack of investment friendly environment, lack of attention for the development of agriculture and industrial sectors, emergence of energy crisis and liquidity problem at the financial sector, higher inflationary trend, public service affected by weak project implementation, continuation of discrimination and exclusion along with poverty, deprivations and backwardness. Hence, in order to address these challenges, the budget has tried to advance programs based on basic principles as mentioned below. a. Building a self reliant, progressive, just and peaceful new Nepal through elimination of feudalism, and exploitation, and suppression of monopolistic capitalism through the adoption of socialism- oriented, people centered and public welfare inclined economy. For this, three pronged economic policy of the Interim Constitution with the participation of public, private and cooperative sectors will be materialized. b. Establishment of economic and social foundation characterized by social justice and inclusion by freeing people from all kinds of inequalities, discrimination, exploitation, suppression and injustice prevalent in the society. For this, ownership and access of poor will be increased over the sources and means of production. c. Distribution of relief to the families of conflict victim, martyrs and disappeared people and completion of reconstruction and 4 rehabilitation works which were destroyed during the conflict period. d. Accord priority on the building of infrastructures by maintaining regional and demographic balance and assist in the proposed federal structure of the country. To encourage private sector investment in big infrastructure projects on basis of public-private partnership. To make necessary legal framework in order to attract foreign investment in mega infrastructure projects including the hydro power. e. Maintenance of overall macroeconomic stability, advancement of works on reform and governance for the stability of financial sector, maintain budget deficit within a safe limit, allocation of budget with a view to balance regional and demographic features, maintenance of financial discipline through accountability and transparency, bring normalcy in public service delivery through reforms in distribution system and make an effective price monitoring system. f. In order to achieve benefits from rapid economic development of two giant emerging economies of neighboring India and China, a special priority will be given for expansion in
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